Someone at Macmillan has a sense of humor. When I landed on the site Saturday night to check on e-book pricing and availability following Amazon’s one-week banishment, the book being promoted at the top of the front page was Priceless: The Myth of Fair Value (and How to Take Advantage of It) by William Poundstone about pricing as a “collective hallucination.” More than fitting as Macmillan and other publishers challenge Amazon’s mission to sell most e-books for $9.99.
Among the current collective hallucinations about e-book pricing: Amazon (NSDQ: AMZN) stands alone in trying to keep prices lower and publishers can’t set rates. Publishers haven’t been able to set Amazon’s rates but Macmillan is selling books online for the price it prefers — while linking to other sites with lower or sometimes similar pricing. Case in point: best-seller Sarah’s Key disappeared last Friday during a power play between Amazon and Macmillan. (See our chart Pricing E-Books: A Snapshot.) Macmillan said it was switching to an “agency” or commission model where it sets the rate and e-tailers get a commission (usually 30 percent) and by the beginning of March would be pricing new books and bestsellers higher. Amazon retaliated by removing all Macmillan from its print and Kindle stores, but within days went public with its plans to follow the new pricing scheme. Late last week the print versions started to return; paidContent can confirm the Kindle downloads are back, too.
At what price? For now, Sarah’s Key is $9.99 for Kindle and for BN.com (NYSE: BKS), which describes it as 28 percent below list price. The e-book is selling for list price of $13.95 at Macmillan.com, where it can be purchased in Adobe (NSDQ: ADBE) PDF and eReader formats, and Mobipocket. The $13.95 matches the list price of the trade paperback — which runs $7.96 on Amazon and $10.04 at Borders. Macmillan is charging more than the going rate of a print edition for an online edition. Amazon is too but it also discounts the $25 hardback to $17, which is considerably more than the Kindle edition.
When Macmillan implements its new scheme in March, some e-books could wind up with lower prices but new releases are likely to be $12.95 and $14.95. In an ideal world, prices would ratchet back after the book has been out for a while and e-book prices would take the lower costs of digital distribution into account but it could be months before we get any real gauge. One possible wrench: Apple’s desire to wear the white hat for publishers and its willingness to go in a different direction with e-book prices than it did with music by encouraging a new release price around $15 and promising not to discount a la Amazon and B&N. If Apple (NSDQ: AAPL) promotes a sliding scale, that could make a difference.
Meanwhile, Amazon is pre-selling Game Change — a hot political book that HarperCollins has kept from e-book editions since it published Jan. 11 in the hopes of selling more hardbacks — on Kindle for $8.91; when the book is finally available Feb. 22, the price goes up to $9.99. The hardback is $13 on Amazon, list $27.99. The book mentioned at the top of this story came out in January and there’s no sign of its arrival as an e-book so no way for me to impulse buy. Hachette, which is joining Macmillan in the switch, told literary agents that it would promise same-date release as part of the change, according to GalleyCat.
About those higher prices: If all publishers switching to the agency model follow suit — and add scaling as print books shift in price or release dates fade in the distance — it will go a long way to appeasing readers currently supporting the nascent e-book sector. If they add e-book-only extras, as Apple and others have encouraged with music and albums, that will help support the higher price. Ditto, if they come up with a combo print/e-book version or guarantee access to text-to-audio features on the Kindle and other devices. Over the two years that I’ve been buying e-books, I’ve noticed that when an e-book costs more than $10 — and in some cases, more than $7 or so, that either makes it a library book for me or a book that I’ll consider buying in print if I know others who will read it. Publishers who leave readers and book buyers out of the equation when they set these price plans may still win the round — but they’ll lose the game.